India added 518 MW of solar open access in the first quarter (Q1) of the calendar year (CY) 2023, marking a remarkable increase of more than 68% compared to the 308 MW installed in Q4 2022.

However, on a year-over-year (YoY) basis, the installations declined by 37%.

The numbers were revealed in the recently published Q1 2023 Mercom India Solar Open Access Market Report.

According to Priyadarshini Sanjay, Managing Director of Mercom India, the primary driver for the rise in open access solar installations is the demand from the commercial and industrial segment consumers looking for cost-saving alternatives in light of increasing retail electricity tariffs in states.

She said, “The C&I customers are finding it lucrative to go for open access as they can save on costs. It is a growing trend among C&I customers as they have environmental, social, and corporate governance (ESG) and RE100 initiatives.”

“Another contributing factor is that big data centers are contracting for higher capacities. There has been a perceptible change in their attitude toward open access, which has led to the growth in installations,” Sanjay added.

By March 2023, India’s solar open access project development pipeline had reached approximately 6.4 GW.

The majority, comprising more than 68% of the pipeline, was distributed among Andhra Pradesh, Rajasthan, Maharashtra, Karnataka, and Gujarat.

During Q1 2023, Karnataka continued to hold its position as the frontrunner, contributing to more than 55% of the total capacity added in India.

Maharashtra accounted for 14% of the capacity addition, while Tamil Nadu contributed around 8%.

The top five states combined contributed 88% of the total installations during the quarter.

Ms. Sanjay added that the demand for open access in Karnataka remains high as the state’s IT sector and data centers constantly seek cost-effective energy sources.

In Maharashtra, the country’s economic hub, open access solar is more viable since the retail tariff is among the highest.

Tamil Nadu recently hiked its retail tariff, making open access solar a go-to option for the textile and chemical industries, which are also high-energy consumers in the state.

By March 2023, the cumulative installed solar open access capacity reached 8.3 GW.

Karnataka contributed more than 37% of the overall solar open access capacity. Maharashtra was second with over 12% of the total installations.

In Q1 2023, the open access solar project costs experienced a decline and followed a similar trend as seen in large-scale projects and rooftop solar. The drop was attributed to lower module prices and increased imports following the government’s relaxation of the Approved List of Models and Manufacturers (ALMM) order.

Lower project costs resulted in more attractive power purchase agreement (PPA) prices. Capacity additions during the quarter were driven by the involvement of C&I entities with renewable purchase obligations (RPO) and the implementation of critical provisions of General Network Access.

“Despite regulatory challenges in many states, open access solar demand continues from C&I units keen on reducing their energy costs and locking the tariffs for long-term. With most state DISCOMs raising the retail tariffs and the solar project cost coming down, we could see the growth continuing in the next few quarters,” commented Sanjay.

Sanjay added that with the interstate transmission system (ISTS) waiver in place, open access installations are bound to increase in the near future.

With a market share of nearly 53%, Karnataka dominated the Green Day-Ahead Market (G-DAM) as the leading electricity supplier in short-term markets.

Maharashtra became the leading energy procurer from G-DAM, followed by Delhi, representing around 19% and 11% of the total power purchased.

The trading of Renewable Energy Certificates (REC) in the Indian Energy Exchange (IEX) witnessed a more than 34% growth compared to the preceding quarter.

Open access charges didn’t change for most states, allowing capacity additions without revisiting the landed costs and the electricity cost savings.

The report extensively examines the solar open access sector in 17 states, encompassing open access charges, retail supply tariffs, and market size analysis. It includes comprehensive information on average PPA prices, net landed costs, banking regulations, short-term transactions, and the open access policies and regulations introduced in Q1 2023.

The report also highlights the perspectives and insights of the leading open access installers nationwide during the quarter.

The ‘Q1 Mercom India Solar Open Access Market Report’ report is 61 pages and covers vital information and data on the market.

 For the complete report, visit: https://www.mercomindia.com/product/q1-2023-mercom-india-solar-open-access-market-report-518-mw-installed